In their last TU they said the 'board is undertaking a review of a range of options that may be available to enhance its medium and longer term funding position, thereby allowing the Group to capitalise on a market recovery.' This does not sound like a raise and at the current price would be somewhat ridiculous though it appears the market fears that. Wouldn't it be sensible to address the precipitous share price fall and explicitly rule out a raise?
You did mention in the comments the chair is buying shares often, I could only see the last time being in August after the profit warning, is that the last purchase you have also?
I used to hold here, and did OK. But the clarion call to abandon ship for me was the founding family dumping shares a while back. They must know the business better than anyone!
Hi Bill, looking at dates most sells were pre-Grenfell - Jones and Byrom - are they the founding family? But the one which stands out are ex-CEO RC Simpson. But I notice the pattern was large award of options and sell half. Keep half. But also buy more (4/10/22). After his stepping down July 2023 he's no longer subject to scrutiny.
That's quite a nuanced clarion call but well done for interpreting it correctly.
I see the Chair is eagerly buying more and more WJG. What do you read into that?
I actually think it looks cheap at the mo, but I simply don't have any confidence in the management anymore. I see the attractions, but it is not for me.
Thank you and great article. They did say they needed to raise more money and they also highlighted higher rates have impacted sales. With bonds rising and rates not falling as fast it’s likely they are still struggling and any raise we know is usually at a discount unless it’s non dilutive. I think these things are currently weighing on the price but the whole house building sector is under pressure atm too
Hi OB. They mentioned needing more capital in the most recent results. It was briefly discussed in the Stocko comments. ( I revisited after reading your article). As it is now deep value I am a bit tempted, but not sure I trust the management to execute. Do you think that they may have lost the confidence of the investment funds who put up the capital for the building projects?
I would point out they speak of needing growth capital in their trading update in order to take advantage of opportunities and grow faster..... that's not the same as "needing more capital" (as in they need cash to keep the lights on).
So I don't see it as a negative particularly. Whether they would be able to obtain equity capital successfully in today's market and at what terms would be a concern - but you would like to think that an initiative that will grow profits say 20% faster would not be undertaken at anything approaching a 20% cost of capital including risk. i.e. if it isn't profitable they wouldn't do it.
I also read through criticisms of past management and notice current management are not connected to that or the same people in charge today. So is there a specific reason you think not to trust the current management? They appear to be managing through a challenging period quite well and I've not seen anything untoward.
I can see Polar, M&G and Gresham have all added in July 2024 to WJG so that seems like evidence that they've not lost the confidence of IIs. In fact the first two have faced big outflows so an inflow points to the opposite doesn't it?
Hi OB. I was referring to their admission that they are not achieving the forward project sales previously anticipated. They supply a few possible reasons all of which are external to themselves. They need the forward-funding market to improve and then to maintain/grow market share within it. I do think it's a good bet.
Yes they're certainly speaking about growth capital. They said the 'board is undertaking a review of a range of options that may be available to enhance its medium and longer term funding position, thereby allowing the Group to capitalise on a market recovery.' This does not sound like a raise and at the current price would be somewhat ridiculous. Don't you think it would be sensible to address the precipitous share price fall though and explicitly rule out a raise?
You did mention in the comments the chair is buying shares often, I could only see the last time being in August after the profit warning, is that the last purchase you have also?
Hi OB, yes I'm sure it's difficult and not knowing all the restrictions I can't really say what's the best way here. It just seemed counterproductive to create or leave that uncertainty; even an experienced fund manager seemed to think it could imply a raise when asked though they did average down so naturally PIs will generally be more unsure. I recall Gresham said were not certain what to do with the position and it was under review some weeks ago. These are both from vox interviews btw. Best, Mike
In their last TU they said the 'board is undertaking a review of a range of options that may be available to enhance its medium and longer term funding position, thereby allowing the Group to capitalise on a market recovery.' This does not sound like a raise and at the current price would be somewhat ridiculous though it appears the market fears that. Wouldn't it be sensible to address the precipitous share price fall and explicitly rule out a raise?
You did mention in the comments the chair is buying shares often, I could only see the last time being in August after the profit warning, is that the last purchase you have also?
I also hold Watkin Jones. Best, Mike
I used to hold here, and did OK. But the clarion call to abandon ship for me was the founding family dumping shares a while back. They must know the business better than anyone!
Hi Bill, looking at dates most sells were pre-Grenfell - Jones and Byrom - are they the founding family? But the one which stands out are ex-CEO RC Simpson. But I notice the pattern was large award of options and sell half. Keep half. But also buy more (4/10/22). After his stepping down July 2023 he's no longer subject to scrutiny.
That's quite a nuanced clarion call but well done for interpreting it correctly.
I see the Chair is eagerly buying more and more WJG. What do you read into that?
OB
I actually think it looks cheap at the mo, but I simply don't have any confidence in the management anymore. I see the attractions, but it is not for me.
Thank you and great article. They did say they needed to raise more money and they also highlighted higher rates have impacted sales. With bonds rising and rates not falling as fast it’s likely they are still struggling and any raise we know is usually at a discount unless it’s non dilutive. I think these things are currently weighing on the price but the whole house building sector is under pressure atm too
Thank you. Do you have a link to where they said they need to raise money?
Hi OB. They mentioned needing more capital in the most recent results. It was briefly discussed in the Stocko comments. ( I revisited after reading your article). As it is now deep value I am a bit tempted, but not sure I trust the management to execute. Do you think that they may have lost the confidence of the investment funds who put up the capital for the building projects?
Hi Doogie,
I would point out they speak of needing growth capital in their trading update in order to take advantage of opportunities and grow faster..... that's not the same as "needing more capital" (as in they need cash to keep the lights on).
So I don't see it as a negative particularly. Whether they would be able to obtain equity capital successfully in today's market and at what terms would be a concern - but you would like to think that an initiative that will grow profits say 20% faster would not be undertaken at anything approaching a 20% cost of capital including risk. i.e. if it isn't profitable they wouldn't do it.
I also read through criticisms of past management and notice current management are not connected to that or the same people in charge today. So is there a specific reason you think not to trust the current management? They appear to be managing through a challenging period quite well and I've not seen anything untoward.
I can see Polar, M&G and Gresham have all added in July 2024 to WJG so that seems like evidence that they've not lost the confidence of IIs. In fact the first two have faced big outflows so an inflow points to the opposite doesn't it?
OB
Hi OB. I was referring to their admission that they are not achieving the forward project sales previously anticipated. They supply a few possible reasons all of which are external to themselves. They need the forward-funding market to improve and then to maintain/grow market share within it. I do think it's a good bet.
Yes they're certainly speaking about growth capital. They said the 'board is undertaking a review of a range of options that may be available to enhance its medium and longer term funding position, thereby allowing the Group to capitalise on a market recovery.' This does not sound like a raise and at the current price would be somewhat ridiculous. Don't you think it would be sensible to address the precipitous share price fall though and explicitly rule out a raise?
You did mention in the comments the chair is buying shares often, I could only see the last time being in August after the profit warning, is that the last purchase you have also?
I also hold Watkin Jones. Best, Mike
Hi Mike, yes August is the last RNS, I'm in two minds about the need to comment. There are restrictions on what they can and can't say. It seems to me the newsflow (e.g. https://watkinjonesplc.com/news-insights/2024/leeds-co-living-scheme-given-the-green-light/) is doing the talking.
Hi OB, yes I'm sure it's difficult and not knowing all the restrictions I can't really say what's the best way here. It just seemed counterproductive to create or leave that uncertainty; even an experienced fund manager seemed to think it could imply a raise when asked though they did average down so naturally PIs will generally be more unsure. I recall Gresham said were not certain what to do with the position and it was under review some weeks ago. These are both from vox interviews btw. Best, Mike